October 22, 1999 5:00 PM PDT

Amazon sues Barnesandnoble.com over patent

Online retail giant Amazon.com has filed suit against Barnesandnoble.com, alleging that the rival book and music e-tailer illegally copied Amazon's patented 1-Click technology.

The suit was filed late yesterday in U.S. District Court in Seattle, alleging patent infringement. Amazon is seeking an immediate and permanent court-ordered halt to a similar feature now being used by Barnesandnoble.com. Both companies' features allow a user to make a purchase with one click of the mouse, without having to reenter shipping and billing information.

The suit also seeks an unspecified amount of damages.

"We spent thousands of hours to develop our 1-Click process, and the reason we have a patent system in this country is to encourage people to take these kinds of risks and make these kinds of investments for customers," Amazon.com chief executive Jeff Bezos said in a statement. The company began offering the 1-Click feature in September 1997.

A Barnesandnoble.com representative said in an interview, "The lawsuit brought against us by [Amazon] is a desperate attempt to retaliate for our growing market share. We believe the allegations to be completely without merit and we will vigorously defend our position."

"However, we are pleased to note that they spelled our name correctly in a press release announcing the lawsuit," the representative added. "In fact, traffic to our Web site was up substantially today because of the publicity. We thank our competitor for the incremental sales." The Barnesandnoble.com rival system is dubbed "Express Lane."

Amazon's suit against Barnesandnoble.com comes at a time when an increasing number of e-commerce companies are trying to defend their online positions by patenting not just their technologies but also their business plans.

Just last week, Priceline.com filed suit against Microsoft because the software giant recently introduced a similar "name your price" service on its Expedia travel site. Priceline maintains it invested years of time and money to develop a patented business model built around its technologies that allow consumers to "name their price" for products and services.

"These cases are going to test the scope of these kinds of patents," said Jeffrey Neuburger, a patents and intellectual property attorney at Brown Raysman Millstein Felder & Steiner.

The area of software patents and business-process patents has been very active recently. Given the successful defense of software patents, Neuburger said he thinks it is very likely that the Priceline and Amazon patents may also be enforceable.

"A patent is presumed valid, so in order to defeat [Amazon's] claim, Barnes and Noble has a tough time ahead of it," Neuburger said. "After a long court battle, they could end up being enforceable, which would alter the landscape of e-commerce."

The U.S. Patent Office awarded Patent No. 5,960,411 to Amazon.com on September 28, 1999.

Financial analyst Chris Vroom of Thomas Weisel Partners said the lawsuit was not surprising, purporting that Internet companies tend to copy innovations as quickly as they can. Vroom said he expected Barnesandnoble.com to successfully defend its service, adding that the lawsuit probably wouldn't seriously affect either company.

Vroom suggested that the lawsuit had as much to do with revenge as with protecting intellectual property. In 1997, on the eve of Amazon's initial public offering, offline book giant Barnes & Noble launched Barnesandnoble.com and at the same time, sued Amazon over Amazon's claim that it was the world's largest bookstore. The two sides later settled the case out of court.

"Turnabout is fair play," Vroom said.

 

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